Question

If the utility for two goods x and y is measured as U=Min {x, y}, then please draw the map of the indifferent curves that best represent the preferences. Explain the economic meaning of the shape of the indifferent curves. Provide real life examples of x and y.

Answer 1

The utility function is defined of complementary goods since it is U=Min {x, y}

the economic importance of the indifference curve is that a consumer will buy exactly the same amount of goody as of good x. these are joint goods which go hand in hand, the increase in price of one good will lead to decrease demand of another commodity. they share inverse relationship with each other

real-life example like shoes. the consumer will buy exactly the same number of the left shoes as of the right shoe. if he/she buys 6 pairs of left shoe in no case he will buy 5 pairs of the right shoes.